Over the past two weeks, the spot rate has therefore exhibited a sharp drop of Rs 150- largely exacerbated by nervous mill buying and the fact that the continued rains in much of Punjab have put the ginners in a hurry to get their unsold stock off their hands.
In the backdrop of this scenario, the textile sector's performance has generally remained favourable during the first half of CY13, with the sector reporting a robust growth in exports during Jul'13 with exports clocking in at $1,210 million- nearly - higher by 11 percent year-on-year.
Cotton yarn exports during the period rose by 8 percent month-on-month to $202 million, with a healthy increase in volumes largely being credited to the improvement in electricity supply as well as a substantial picking up of demand from Beijing.
Going forward, the prices may ease up momentarily in the short term when the arrivals resume their steady pace after business picks up next week; however, analysts and traders remain wary of the situations and all the parties are on the lookout for: 'On which side the camel will sit' in the coming weeks.
On the international front things remained similarly under pressure, with cotton futures at the mercy of liquidating investors as huge stocks in India and the improving weather conditions in important wheat growing areas in the US weigh on the prices.
On Friday, the most-active December cotton contract on ICE Futures was down by 3.9 percent, at 85.41 cents/ lb after the futures set a five-month high of 93.72 cents a lb last week.
Rice
The local rice market had been slow due to Ramazan languor and continues to remain subdued following the end of Ramazan and Eid holidays. While they remain steady on the local front, prices on the export front have begun to show strain as they come under pressure.
At this point in time, with depleting reserves ahead of new arrivals at the tail end of the season, export prices for both the Basmati and Long Grain varieties were expected to remain firm. But industry sources reveal that Pakistani rice has been struggling against cheaper Indian and Vietnamese offerings and has taken some battering at their hands in the last 2 weeks.
In the last 7 days alone, the Pakistani benchmark 5 percent broken white rice lost $10/ton, and was being quoted for between $410 and $420, down from the season high of $460, sources report.
However, traders maintain that enquiries have begun to arrive from the Middle Eastern markets and demand from the Chinese front is also likely to return as soon as the new crop hits the market in October. The fears of prolonged delays in arrivals have also been somewhat assuaged as crop arrivals from the Punjab region are likely to be delayed for 10-15 days only with heavy rainfall easing concerns about the crop size and quality.
All in all, the incoming season should remain a fruitful one on the rice supply front. If the weather conditions hold, India together with mainland China is forecast to lead the region's growth in rice production, but virtually all countries in the region are heading towards larger crops according to the UN Food and Agriculture Organisation's (FAO) latest Rice Market Monitor report.
Wheat
The price of wheat in the open market has been consistently shooting up post-Eid and a crippling shortage of flour may very well be on the horizon, industry sources report once again.
With the rates of wheat in the open market going up as high as Rs 1450 per 40 kg Rs 3,625/ 100 kg) in some areas of the country, millers are finding it hard to cover their costs and selling flour at Rs 780/20 kg bag has become entirely unfeasible, causing many to shut shop for the time being.
Hence the millers continue to look in unison in the direction of the food departments who are yet to release stocks to their chakkies. In this lieu, the Sindh government seems to be first one making some strides and announcing the release price of Rs 3,450 for the stocks that will be doled out some time towards the close of August.
Although the release price remains lower than expected, there is a strong possibility that it would suffice since the situation is very likely to come to a head soon. With the government allowing private parties to bring in the imported wheat, hoarders are likely going to be pushed to come out of hiding. And when that happens prices should automatically be back to their normal levels, says industry insiders. The way the wind blows in this particular situation therefore remains to be seen and the picture should become clearer in another few weeks.
Sugar
The wholesale prices of sugar remained stable last week with no adverse movements in both the Karachi's Jodia Bazaar wholesale market and Lahore's Akbari Mandi market. However, going forward, some small slippages in prices will become evident as the crushing season comes closer.
However, there are some legitimate worries that the crushing season may be delayed as the government has not yet made proper arrangements to procure the surplus stock of 0.4 million tons of sugar through Trading Corporation of Pakistan.
Some industry insiders report that a number of millers are currently facing serious financial snags, as the current sugar stocks will last well into the first quarter of 2014, which will have serious effects on the industry's capacity to fulfil its fiscal obligations. With no mechanism in place to dispose of their stocks and filled to the brim, the industry is currently forced to sell its product below cost, which may result in defaults to banks amongst other things.
In the meantime, the global sugar supply situation seems as healthy as ever. Although stable demand exists and no significant supply concerns from other major producers seem to be on the horizon, the cold weather in Brazil- the biggest producer of the commodity in the world- did however put a break on sugar prices and stopped its downward spiral for a little while.
Hence as a result of the frost and sleet hitting Brazil's centre south, sugar rose to the highest in months during the first week of August, but has since took its usual bearish stance.